ReposiTrak(TRAK) - 2022 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements This section presents unaudited consolidated financial statements, detailing changes in assets, liabilities, revenue, and net income, primarily influenced by reduced MarketPlace transactions Consolidated Condensed Balance Sheet Highlights (Unaudited) | Account | Dec 31, 2021 | June 30, 2021 | Change | | :--- | :--- | :--- | :--- | | Total Current Assets | $26,994,453 | $29,701,774 | -9.1% | | Cash | $21,708,693 | $24,070,322 | -9.8% | | Total Assets | $50,284,213 | $55,046,883 | -8.7% | | Total Current Liabilities | $4,239,079 | $9,300,783 | -54.4% | | Lines of credit | $930,000 | $6,000,000 | -84.5% | | Total Liabilities | $4,797,614 | $9,905,997 | -51.6% | | Total Stockholders' Equity | $45,486,599 | $45,140,886 | +0.8% | Consolidated Condensed Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | YoY Change | Six Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2020 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $4,353,587 | $5,174,204 | -15.9% | $8,913,264 | $10,399,606 | -14.3% | | Income from Operations | $957,569 | $384,585 | +149.0% | $2,124,046 | $1,015,564 | +109.2% | | Net Income | $872,068 | $1,622,859 | -46.3% | $1,818,885 | $2,177,685 | -16.5% | | Diluted EPS | $0.04 | $0.08 | -50.0% | $0.08 | $0.10 | -20.0% | Consolidated Condensed Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity (Six Months Ended) | Dec 31, 2021 | Dec 31, 2020 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $3,058,954 | $3,756,014 | ($697,060) | | Net cash provided by (used in) investing activities | $1,357,036 | ($103,218) | $1,460,254 | | Net cash used in financing activities | ($6,777,619) | ($103,473) | ($6,674,146) | | Net increase (decrease) in cash | ($2,361,629) | $3,549,323 | ($5,910,952) | Notes to Consolidated Condensed Financial Statements These notes detail the company's SaaS operations, key accounting policies, revenue disaggregation showing a decline in MarketPlace revenue, and equity information including a share repurchase program - The company operates as a Software-as-a-Service (SaaS) provider through its subsidiary ReposiTrak, offering three main application suites: MarketPlace, Compliance and Food Safety, and Supply Chain solutions, utilizing a 'hub and spoke' business model[21][22][25] Disaggregation of Revenue (Unaudited) | Revenue Type | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | YoY Change | Six Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2020 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Recurring – Subscription, Support and Services | $4,300,168 | $4,016,033 | +7.1% | $8,705,612 | $8,018,698 | +8.6% | | Non-Recurring – Services | $30,718 | $124,710 | -75.4% | $81,618 | $257,859 | -68.4% | | Transaction Based – MarketPlace | $22,701 | $1,033,461 | -97.8% | $126,034 | $2,123,049 | -94.1% | | Total Revenue | $4,353,587 | $5,174,204 | -15.9% | $8,913,264 | $10,399,606 | -14.3% | - The Board of Directors increased the Share Repurchase Program by $10 million on August 31, 2021, with approximately $10.6 million remaining authorization for future share repurchases as of December 31, 2021[61] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses revenue declines due to reduced non-recurring MarketPlace sales, offset by recurring subscription growth and improved operational income from lower service costs, alongside an enhanced financial position from debt payoff and a new credit facility Results of Operations Revenue decreased for both three and six-month periods due to non-recurring MarketPlace sales, while income from operations significantly increased due to reduced cost of services Comparison of Three Months Ended Dec 31, 2021 vs 2020 | Metric | Q2 FY22 | Q2 FY21 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $4,353,587 | $5,174,204 | -16% | | Cost of services | $817,213 | $2,091,588 | -61% | | Income from operations | $957,569 | $384,585 | +149% | Comparison of Six Months Ended Dec 31, 2021 vs 2020 | Metric | H1 FY22 | H1 FY21 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $8,913,264 | $10,399,606 | -14% | | Cost of services | $1,663,700 | $4,072,545 | -59% | | Income from operations | $2,124,046 | $1,015,564 | +109% | - The decrease in revenue was primarily due to significant MarketPlace revenue from sourcing hard-to-find items like Personal Protective Equipment (PPE) during the height of COVID-19 in 2020, which did not recur in 2021, with the company now focusing on growing recurring subscription revenue and reducing emphasis on transactional revenue[83][84][85] Financial Position, Liquidity and Capital Resources Cash decreased due to debt payoff, but working capital increased significantly, and a new $10 million revolving credit facility was secured, ensuring sufficient liquidity - Cash and cash equivalents decreased by $2.4 million (10%) from June 30, 2021, to December 31, 2021, principally due to a $6 million payoff of financing arrangements[108][109] - Working capital increased by $2.4 million from June 30, 2021, to $22.8 million at December 31, 2021, primarily due to a $5.1 million (54%) decrease in current liabilities, largely from the payoff of the line of credit[113][115] - The company replaced its prior $6.0 million credit facility with a new $10.0 million revolving line of credit with U.S. Bank, maturing on March 31, 2023[79][117] Quantitative and Qualitative Disclosures About Market Risk The company's market risk is primarily from immaterial interest rate changes on investments, with no significant foreign currency exchange rate exposure due to domestic operations - The company's main market risk is from interest rate changes affecting its investments in short-term financial instruments, which is considered immaterial[133] - As the business is conducted principally in the United States, financial results are not materially affected by foreign currency exchange rates[131] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of December 31, 2021, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of December 31, 2021[136] - No material changes to the company's internal control over financial reporting were identified during the period[136] PART II - OTHER INFORMATION Legal Proceedings The company is not currently involved in any pending or threatened material legal proceedings that would adversely affect its business or financial condition - There are no pending or threatened material legal proceedings against the company[138] Risk Factors No new risk factors have been identified beyond those previously disclosed in the Annual Report on Form 10-K for the fiscal year ended June 30, 2021 - No additional risk factors have been identified beyond those disclosed in the Annual Report on Form 10-K for the fiscal year ended June 30, 2021[139] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None reported[140] Exhibits This section lists exhibits filed with the Form 10-Q, including the Revolving Credit Agreement, officer certifications, and Inline XBRL data files - Key exhibits filed include: - Revolving Credit Agreement with U.S. Bank National Association - Certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Act Sections 302 and 906 - Inline XBRL documents[143]